FARMER lobby groups are pushing for the Australian Securities and Investments Commission (ASIC) to remove an exemption currently granted to pool managers that means they are not required to issue product disclosure statements or have financial services licences.
Critics have argued the exemption allows pool managers to be less transparent than similar products used in the finance sector.
ASIC is currently reviewing the exemption provided to grain pools classed as managed investment schemes.
Warracknabeal district farmer and Victorian Farmers Federation (VFF) member Ross Johns said the issue came down to transparency and accountability.
“There is little difference between managing a pool and fund management, it is all revenue for the person in question yet the rules surrounding the two types of product are different.”
Mr Johns encouraged growers at a VFF branch meeting in Horsham last week to contact ASIC during its review process with their perspective on the matter.
Pools have been in the spotlight for their lack of transparency in the agriculture sector in recent years, culminating in a group of Western Australian grain growers taking Emerald Grain to court for the underperformance of the 2011-12 wheat pool.
In response to grower unhappiness with pool structures, Grain Trade Australia (GTA) in 2013 implemented a voluntary Code of Practice in regards to pool operators, including provisions regarding the use of estimated pool returns as a pricing signal and a quarterly issuing of reports regarding the pool’s performance.
Brett Hosking, VFF grains group president, said his group would urge ASIC to make the voluntary code mandatory at the very least.
“We ultimately would like them to do away with the exemptions altogether.”
Pool providers have previously said that removal of the exemption would lead to higher costs that would be passed back to growers.
GTA chief executive Pat O’Shannassy said the organisation did not have an official position on the ASIC review but said the code played an important role in providing transparency for people using grain pools.
Mr Johns said he did not feel there would be significant additional costs for pool operators should the laws be changed if they were already adhering to best practice management.
“In theory, if they are well run pools and have well run management structures then they would be no different to managed funds.”
Mr Johns said farmers were becoming increasingly aware of the performance of their grain marketers.
“Across the board as a whole we’ve seen a run of failures of smaller grain traders and in the pool sector there have been some significant underperformances, so farmers are looking closer at these matters.”
He said the ASIC review had come at a good time, given the strong possibility of large deliveries to pools this season.
“There is the prospect of there being a lot of grain about at harvest and prices are low, so on past experience you would think there would be higher deliveries to pools.”